Developers are applying novel conservation strategies to prevent water shortages from triggering building moratoriums.

Many cities in the world are facing water scarcity, a problem that will become more widespread with the onset of global climate change, and real estate developers are finding it necessary to adapt.

The severity of the recent drought in the western United States, the worst ten-year episode in the region’s recorded history, has surprised even some of the most seasoned water managers, who are accustomed to the region’s pervasive aridity. “We plan for droughts, but nonetheless expect to get a reliable baseline supply from the Colorado River and California Aqueduct,” reports Jeffrey Kightlinger, general manager of the Metropolitan Water District of southern California, which supplies water to 19 million people in the Los Angeles and San Diego regions. “These assumptions really started to change in 2003 when we lost half of our supply because of a tremendous drought on both systems.”

Water levels at Lake Mead, a reservoir on the Colorado River between Nevada and Arizona, are dropping rapidly and by 2012 could fall below the intake valve that supplies 90 percent of Las Vegas’s water. Within a half century, the influence of climate change means that Lake Mead has a 50-50 chance of becoming a “dead pool” behind Hoover Dam, according to Tim Barnett, research marine physicist at the University of California at San Diego’s Scripps Institution of Oceanography, and Balaji Rajagopalan, associate professor at the University of Colorado. This would deprive Arizona, Nevada, and southern California of a vital water source for 30 million people and hydropower for 374,000 homes.

Average temperatures hit record highs worldwide over the past decade, making drought and water scarcity a global challenge. Australia is locked in an epic 12-year drought. “There has been a major shift among developers, who now embrace the opportunity to create high-quality urban places that are compatible with the reality of less rainfall and available water,” says Ross Holt, chief executive of Landcorp, a West Australia real estate development firm.

China faces scarcity issues compounded by worries about water quality. “The biggest concern in China is lax enforcement of water quality standards,” says Vivian Lee, associate principal at engineering and architecture firm AECOM in Hong Kong. “In many places with aggressive developments, water is being polluted to the point where secondary use or water recycling becomes very difficult.”

Even after these droughts subside, the perception of “normal,” as defined in 20th-century terms, will be a thing of the past. “Most of the really important impacts of climate change are not going to come directly from temperature increases, but because of changes to the water cycle,” warns water scientist Brad Udall, director of the Western Water Assessment, a Boulder, Colorado– based joint effort between the Cooperative Institute for Research in Environmental Sciences at the University of Colorado and the National Oceanic and Atmospheric Administration’s Earth System Research Laboratory. A significant amount of scientific research now shows that climate change introduces volatility to water supplies worldwide by altering the averages and extremes of precipitation, evaporation, and river volumes. This upends the premise that natural water systems fluctuate within an unchanging envelope of variability, which is fundamental to most water resource–management practices.

Rights to water resources in the western United States are governed by a legal structure established in the 19th century, and the region’s major water infrastructure was built with the assumption that climate conditions in the 20th century—the wettest 100 years in a millennium— would remain constant.

The U.S. government’s efforts to lead a rational policy response are stymied by a lack of reliable data. “The United States has not conducted a comprehensive water study since the Carter administration,” notes Deanna Archuleta, deputy assistant secretary at the U.S. Interior Department. “We don’t know how much water is available, where it is located, or if it is of acceptable quality.”

In lieu of a national strategy, state and local authorities have applied a jumble of incremental policies to cope with threats to their individual water supplies. Because they are in the precarious position at the bottom of the western water “food chain,” municipal users—and the real estate development industry, in particular—face the greatest risks.

Surface waters in the western United States generally are apportioned according to a legal doctrine of “last in time, last in right.” This means long-term water rights vested to agricultural owners could remain secure during a drought, while municipal users with newer rights stand to lose their supplies.

Local governments could relieve some pressure on their water supplies by raising water rates to a level that would promote conservation, or by mandating conservation outright—though either approach could be politically unpalatable in communities accustomed to cheap and plentiful water. Instead, the burdens of water scarcity are often shifted to new development and, in turn, future residents.

A number of building projects in California are being curtailed because a recent change in state law requires local water authorities to prove that a 20-year water supply is secure before they grant tentative plat map approval –an approach being applied selectively across the western part of the country.

“Municipalities are simply running out of water supplies in their portfolios . . . so they are now requiring that developers acquire and transfer new water rights before granting land use entitlements,” notes Clay Landry, managing director of West-Water Research LLC, a water marketing firm based in Boise, Idaho. “Transferring a water right in New Mexico is, at minimum, a two-year process,” explains Merritt Brown, owner of SF Brown, a Santa Fe, New Mexico–based developer of mixed-use projects. “You have to go to a farmer, buy his water right, then sit two years, hope it’s going to get approved, and then go back into the city and ask them for [permission to build] a project.”

Meanwhile, the price of water rights is skyrocketing in some markets. For example, in Santa Fe the rights to one acre-foot (1.23 million liters) of water per year now costs roughly $30,000 ($7,500 per new household, based on a requirement of 0.25 acre-foot per household)—up from $4,200 per acre-foot ($1,050 per new household) in 2002.

A comprehensive strategy to address water scarcity is possible, but it will require water utilities, municipal governments, and the development industry to embrace new land use and development practices as part of the solution.

“The Metropolitan Water District is now working with the development community and urban planners in southern California to figure out how to manage smart growth over the next decade, even though we can’t say for sure how the future is going to pan out,” reports Kightlinger.

New thinking is already taking hold in communities throughout the United States, as well as in places like Australia and the Middle East, on the vanguard of scarcity issues—thinking that recognizes that every parcel of land and each building plays a role in augmenting and stretching finite water supplies further. For example, Michael Ogden, founding principal of Natural Systems International, an environmental and water engineering in Santa Fe, argues that a new model is needed. “The regulations handle potable water, wastewater, and rainwater discretely,” he points out. “It’s all water, and we’ve got to start using more integrative thinking when designing our projects and communities.”

Trevor Hill, president of Global Water, a private water utility based community in Tempe, Arizona, describes the conservation potential of new development. “There is a tremendous opportunity on the demand management side. We can integrate water, wastewater, and recycled water systems into communities at the outset with a material reduction in water use and rates,” he notes.

In some cases, developers are pushing the envelope by applying novel conservation strategies— along with time-tested methods like low-water-use landscaping—to prevent water shortages from triggering building moratoriums. But first they have to win over local and state regulators.

Bob Taunton cites an example from his tenure as general manager of Rancho Viejo, a master planned community in Santa Fe, created by SunCor, a development firm based in Tempe, Arizona. “We needed to increase the number of units we could get out of an acre-foot of water at Rancho Viejo or we were out of business,” he says. “The county eventually approved us to build five units per acre-foot of water after we proposed the use of cisterns, which kept the project going with enough time to acquire additional water rights for 1,300 more units.”

District and building water retrofits can offer similar gains as well. Grant McInnes, associate principal in the San Francisco office of Arup, a multidisciplinary design, planning, and engineering firm, offers an example of how Stanford University in Palo Alto, California, understands the benefit of an overall campus water strategy. “Instead of putting 60,000 gallons [227,000 liters] per day of water discharge from building cooling equipment into the sanitary sewer, they’ve decided to bring it across the campus for toilet flushing, among other uses.” This has reduced the need to treat and transport potable water, he points out.

Ultimately, adapting to water scarcity will involve, in part, creating projects that forge more resilient connections between people, place, and water. “There is absolutely no question that making a future for real estate development means that we’ll have to deal with water now,” says Harold Smethills, developer of Sterling Ranch, a 3,100-acre (1,250ha) master-planned community in Douglas County, Colorado.

David Stocker is a research director with the ULI Center for Balanced Development in the West, based in Los Angeles. (This article includes material originally presented at Adapting to a Drier West, a Center for Balanced Development in the West symposium held in December in Las Vegas. [S see “Adapting to a Drier West: Symposium Looks at Links between Land Use and Water in the West,” January/ February, page 23.])